COVID-19: TERS BENEFIT – AMENDED DIRECTIVES, SOUTH AFRICA
In an effort to clear up some confusion regarding the C-19 TERS benefit, the Minister of Employment and Labour signed an Amended Directive on 16 April 2020 and a Correction Notice on 20 April 2020, respectively.
It is now clear that employees who were required to take annual leave during the period that the employer’s business was closed (either completely or partially) may claim the C-19 TERS benefit.
Annual leave days are accordingly regarded as no income days for purposes of the benefit. An employer who receives the benefit on behalf of its employees may retain the amount, but must then credit the employee concerned with the proportionate entitlement to annual leave.
The Correction Notice of 20 April 2020 deleted the reference to section 12 of the Unemployment Insurance Act in clause 3.6 of the Directive. This enables employees who receive remuneration in excess of ZAR 17 712 per month and whose employers apply top-up to claim the benefit. By way of example:
- The employee earns ZAR 20 000 per month. In terms of the Directive, benefits are calculated as a percentage (38%-60%) of the employee’s salary. However, the salary at which benefits are calculated is capped at ZAR 17 712 per month. The employee in this example would accordingly only be able to qualify for the maximum benefit of ZAR 6 730.56.
- Assume that the employer pays the employee ZAR 10 000 during the period of closure. The amount paid by the employer and the amount of the benefit would be around ZAR 16 730.56. This is less than the employee’s normal remuneration of ZAR 20 000 and the employee will accordingly qualify for the benefit.
- Assume that the employer pays ZAR 18 000. In this case, the employee would only receive ZAR 2 000 as the benefit, so as to ensure that the employee does not receive more than 100% of her/his normal remuneration of ZAR 20 000.
- Assume that the employer pays ZAR 20 000 (i.e. the employee’s normal remuneration) and that the employee is not required to take annual leave. In this case, the employee will not receive a C-19 TERS benefit.
On the wording of the Directive prior to this correction, the comparison was made vis-à-vis the threshold amount of ZAR 17 712 (and not the employee’s actual remuneration). Thus, if the employer’s top-up and the benefit exceeded the amount of ZAR 17 712, the employee would not qualify for a C-19 TERS benefit.
We are informed that the UIF will automatically re-calculate the benefits of employees whose applications were rejected on this basis.
A revised formula was published, which now incorporates this principle.